Three Arrows Capital owes $3,5 billion to investors

What’s new? The cryptocurrency hedge fund Three Arrows Capital (3AC) owes a total of $3,5 billion to 27 companies that have invested in it. 67% of this amount is due to a loan from the company within Digital Currency Group of $2,36 billion. The data was provided by Teneo Restructuring’s lawyers, who are authorized as part of the fund’s bankruptcy case to value and realize its assets to repay its debts to creditors.

Court document

Who does the hedge fund owe? The largest creditor is Genesis Asia Pacific Pte Ltd, a division of cryptocurrency prime broker Genesis, owned by Digital Currency Group.

The bankrupt crypto broker Voyager Digital provided 3AC with an unsecured loan of $350 million in USDC and 15 250 BTC. At the time of the bankruptcy filing, the broker’s volume of loans issued exceeded $1,1 billion, half of this amount accounted for 3AC.

Lending platform Celsius provided the fund with a loan of $75 million in USDC to the fund. It is also currently undergoing bankruptcy proceedings, but with a view to further restructuring. During the process, it emerged that Celsius’ debts exceeded its assets by $1,2 billion.

Other major creditors included a lending company Equities First Holdings ($162 million), crypto trading platforms FalconX ($65 million) and CoinList ($35 million), and Deribit CEO John Jansen ($51 million).

The document submitted to the court by Teneo’s lawyers runs to over a thousand pages. It repeatedly states that 3AC is insolvent and must be liquidated.

A court in the British Virgin Islands ruled on June 29 to liquidate the fund. After that, 3AC filed for bankruptcy in the United States under a form that prohibits the seizure of assets in the States until the liquidation process is completed.

Later in the case, the court allowed Teneo’s experts to issue subpoenas to the hedge fund’s founders Kyle Davies and Su Zhu to appear at the meeting. Earlier, the lawyers had been unable to locate them and gain access to the fund’s Singapore office. They also noted a lack of “cooperating with the proceeding in any meaningful way” and expressed concerns that the founders of 3AC would try to move the remaining assets offshore.

For more details on the experts’ opinion regarding the consequences of closing 3AC’s positions see the GetBlock Magazine editorial’s feature.